quarterly, page-19

mm

the karara debt level wont be a problem if the ore price stays above $90/t

currently 40% of chinese miners are under water as the ore price has dropped below $120/t thus shifting ore production from inefficient chinese mines to more efficient oz mines

if the ore price stays below $90/t it will kill all chinese and oz miners except bhp and rio then the ore price will go up again.

the current ore price is a $117/t

imo, in the short term it will hover between $115 and $120 then spike up to $140/150 when the chinese infrastructure spending kicks in mid 2013 onwards, then as extra ore supply meets demand in 2015/16 the ore price will settle to about $120 which is at the rate below that chinese mines cant operate profitably.(consensus theory)

but imo the iron ore industry will moderate supply in order to maintain a demand/supply equilibrium and hence still be able to operate in a viable situation

if the iron ore price goes below and stays at $90/t (unlikely) then its the end of karara and gbg and the end of the world as we know it.

there are many analysts theorizing about the price of iron ore and every one of them has a different point ov view ranging from $50/t to $150/t so take your pick.

atm karara is in a sweet spot given that it has total support of its chinese jv partner and cheap chinese loan funds and the ore price is a bouyant $117/t and it is now shipping 2mt of stock piled dso.

ALL IS GOOD